Takeaways
- Disproportionate executive compensation discourages employees from innovating, as rewards often go to those already at the top, not to the innovators themselves.
- Rigid processes in large companies stifle innovation by eliminating the ambiguity and uncertainty that drive creative thinking.
- Limiting innovation to a select few breeds resentment, while cross-departmental collaboration can encourage broader, more effective innovation across the organization.⬤
There’s a common complaint about the lack of innovation in large corporations. Frankly, I’m not surprised. Three significant issues contribute to this problem, and they all come down to how companies handle incentives and motivation.
1. Executive Compensation
It’s not radical or socialist to be frustrated by the disproportionate way people are compensated in big companies. Why would anyone want to innovate when the only ones benefiting are those already making 10-20 times more than the average employee? Money is a powerful motivator, but at many publicly traded companies, innovation is rarely rewarded. Instead, those at the top—often in the C-suite—are compensated outrageously, even when the company underperforms. So, if you do something innovative, chances are a select few will reap the rewards, and you won’t be one of them.
How to fix it: Companies need to put their money where their mouth is. If they truly want innovation, they must reward the innovators within the organization, not just the managers. Another option is to reward innovation at the highest level of leadership, not just cost-cutting. When innovative leaders are celebrated, they inspire and motivate those beneath them to do the same.
2. Process
In large companies, “the process” defines the culture. Unfortunately, process is the antithesis of innovation. It’s about standardization and normalization, ensuring consistent results. But innovation thrives on uncertainty, ambiguity, and serendipity—traits that process-driven environments work hard to eliminate. Most large organizations reward employees for following processes rather than for the outcomes they produce.
People who innovate within these systems often have to work around the processes, which understandably makes some uncomfortable. Innovators are often seen as outsiders or even pariahs, regardless of their good intentions, simply because they deviate from established norms.
How to fix it: Instead of forcing innovators to conform to rigid processes, give them a platform to share their ideas. Don’t dismiss suggestions by telling people to drop them in a suggestion box. That’s meaningless. Encourage more open discussions and fewer process-driven meetings. Don’t just hold status updates—meet to talk about ideas. Yes, these conversations might take longer, but they could result in fewer problems and more innovation down the line.
3. Exclusivity
In large organizations, innovation is often confined to a select few. At cutting-edge companies like Apple, for instance, only a small group is truly involved in innovative work. Most employees are expected to keep their ideas to themselves. As someone who worked there, I found it frustrating, though not always a bad thing. There were plenty of armchair quarterbacks who believed they had the next great idea, and it was often better to limit their involvement.
However, limiting innovation to a select group breeds resentment. Who wouldn’t want to be labeled an innovator when the media and press glorify them? The truth is, the only difference between an innovator and everyone else is that innovators have lots of ideas—good and bad—not just one silver bullet.
How to fix it: Foster cross-pollination between different departments within the company. When employees who think they have a brilliant idea get to interact with those who generate ideas regularly, they gain perspective. They’ll see that innovation is hard work and not as glamorous as it seems. It’s also essential to value those who excel operationally. Not everyone needs to be the mad genius. Companies need both visionaries and effective operators to thrive.